Millard Corporation is a wholesale distributor of office products. It purchases office products from manufacturers and distributes them in the West, Central, and East regions. Each of these regions is about the same size and each has its own manager and sales staff. The company has been experiencing losses for many months. In an effort to improve performance, management has requested that the monthly income statement be segmented by sales region. The company’s first effort at preparing a segmented income statement for May is given below. Sales Region West Central East Sales $ 311,000 $ 796,000 $ 703,000 Regional expenses (traceable): Cost of goods sold 94,000 240,000 312,000 Advertising 105,000 236,000 240,000 Salaries 54,000 54,000 107,000 Utilities 8,700 16,100 13,600 Depreciation 21,000 35,000 28,000 Shipping expense 17,000 31,000 36,000 Total regional expenses 299,700 612,100 736,600 Regional income (loss) before corporate expenses 11,300 183,900 (33,600) Corporate expenses: Advertising (general) 17,000 39,000 34,000 General administrative expense 20,000 20,000 20,000 Total corporate expenses 37,000 59,000 54,000 Net operating income (loss) $ (25,700) $ 124,900 $ (87,600) The cost of goods sold and shipping expense are both variable. All other costs are fixed. Required: 3. Prepare a new contribution format segmented income statement for May. (Round percentage answers to 1 decimal place.)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 64P: Suppose that Kicker had the following sales and cost experience (in thousands of dollars) for May of...

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Millard Corporation is a wholesale distributor of office products. It purchases office products from manufacturers and distributes them in the West, Central, and East regions. Each of these regions is about the same size and each has its own manager and sales staff.

The company has been experiencing losses for many months. In an effort to improve performance, management has requested that the monthly income statement be segmented by sales region. The company’s first effort at preparing a segmented income statement for May is given below.

	Sales Region
West	Central	East
Sales	$ 311,000	$ 796,000	$ 703,000
Regional expenses (traceable):
Cost of goods sold	94,000	240,000	312,000
Advertising	105,000	236,000	240,000
Salaries	54,000	54,000	107,000
Utilities	8,700	16,100	13,600
Depreciation	21,000	35,000	28,000
Shipping expense	17,000	31,000	36,000
Total regional expenses	299,700	612,100	736,600
Regional income (loss) before corporate expenses	11,300	183,900	(33,600)
Corporate expenses:
Advertising (general)	17,000	39,000	34,000
General administrative expense	20,000	20,000	20,000
Total corporate expenses	37,000	59,000	54,000
Net operating income (loss)	$ (25,700)	$ 124,900	$ (87,600)

The cost of goods sold and shipping expense are both variable. All other costs are fixed.

Required:

3. Prepare a new contribution format segmented income statement for May. (Round percentage answers to 1 decimal place.)

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